Wigram Family Settled Estates Ltd v Commissioners of Inland Revenue
| Jurisdiction | England & Wales |
| Judge | Viscount Simonds,Lord Reid,Lord Keith of Avonholm,Lord Somervell of Harrow |
| Judgment Date | 23 January 1958 |
| Judgment citation (vLex) | [1958] UKHL J0123-2 |
| Date | 23 January 1958 |
| Court | House of Lords |
[1958] UKHL J0123-2
House of Lords
Viscount Simonds
Lord Reid
Lord Keith of Avonholm
Lord Somervell of Harrow
Lord Denning
Upon Report from the Appellate Committee, to whom was referred the Cause Wigram Family Settled Estates Limited (in Liquidation) against Commissioners of Inland Revenue, that the Committee had heard Counsel, as well on Monday the 25th, as on Tuesday the 26th, days of November last, upon the Petition and Appeal of Wigram Family Settled Estates Limited (in Liquidation), whose registered office is at 8 Queen Street, May-fair, in the City of Westminster, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal of the 14th of December 1956 might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order might be reversed, varied or altered, or that the Petitioners might have such other relief in the premises as to Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the printed Case of the Commissioners of Inland Revenue lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal, of the 14th day of December 1956, complained of in the said Appeal, be, and the same is hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellants do pay, or cause to be paid, to the said Respondents the Costs incurred by them in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments.
My Lords,
This appeal is from an Order of the Court of Appeal affirming an Order of Mr. Justice Vaisey, who upon a Case Stated by the Commissioners for the Special Purposes of the Income Tax Acts had affirmed their determination. I have not been persuaded that a wrong conclusion has been reached.
The facts are set out in great detail in the Case Stated, which can be referred to if necessary. I shall content myself with a brief summary.
The Appellant Company, which has been in liquidation since the 19th May, 1952, had at the relevant dates the following capital structure:—
(A) 100,000 6 per cent. Redeemable Preference Shares of £1 each;
(B) 2.500 6 per cent. Participating Cumulative Preference Shares of £1 each;
(C) 3,500 6 per cent. Cummulative Non-Participating Preference Shares of £1 each;
(D) 1,500 Ordinary Shares of £1 each.
All these shares were issued and fully paid up except 500 of the (B) shares. The special feature in this structure upon which, in effect, this appeal turns lies in the provisions relating to the Redeemable Preference Shares. These were (a) that such shares should be redeemed on the expiration of 10 years from the 31st March, 1935, out of the profits of the company which would otherwise be available for dividend or out of the proceeds of a fresh issue made for the purposes of such redemption; (b) that for the purposes of such redemption the company should create and, so long as any such shares should remain outstanding, should in each year beginning with the year ended the 31st March 1936, carry to the credit of, a separate fund out of the profits of the company which would otherwise be available for dividend (i) for the year ended the 31st March, 1936, the sum of £9,050. (ii) for each subsequent year ended the 31st March the sum of £7,797 or such larger sum as the Directors might think fit, with a proviso that when and so long as the fund should amount in value to £100,000 no further sum should be carried to its credit; (c) that all sums carried to the fund should be invested in investments thereby authorised with power to vary such investments. The whole of these shares were taken up by the Equity and Law Life Assurance Society Limited (whom I will call "the Society"). It may be assumed that they insisted on the redemption terms as a condition of taking up the shares.
The Appellant Company did not comply precisely with these provisions, no doubt with the assent of the Society, but by the 31st March, 1949, the commencement of the first of the three relevant accounting periods of the company (namely the years of assessment 1949/50, 1950/ 51 And 1951/52), a sum of £77,000 out of the profits had been transferred to and stood to the credit of the fund. During the relevant years ending 31st March, 1950, 1951, 1952, the following further transfers were made to the fund, namely £4,000. £10,000 and £4,000. On the 30th August, 1950, 80,000 of the shares were redeemed by applying to that purpose £80,000 standing to the credit of the fund. The remaining 20,000 shares continued to be held by the Society.
I need state only three further facts. First, it is plain from the facts as stated in the Case and the documents annexed to it that at all times the net assets of the Company were ample to meet its obligations in respect of its Redeemable Preference Shares. Secondly, the Company was an "investment company" to which section 20 (1) of the Finance Act, 1936, section 14 (2) of the Finance Act, 1937, and section 14 (1) of the Finance Act, 1939, applied. Thirdly, the actual income from all sources of the the Finance Act, 1939. Thirdly, the actual income from all sources of the Company for the same three years ending the 31st March was £13,154, £21,885, and £13,527.
It follows from what I have said that the Special Commissioners had no discretion in the matter but were bound to give a direction that these sums should, however much or little thereof had been distributed to the members of the Company, be deemed for the purposes of surtax to be their income. This was at one time, but is no longer, disputed.
The direction having been duly given, it then fell to the Commissioners to apportion the same income among the several members of the Company, that is to say, among the several classes of Preference shareholders and the Ordinary shareholders. In doing so they have no other statutory guidance than is to be found in paragraph 8 of the First Schedule to the Finance Act. 1922, the relevant words of which are:
"The apportionment of the actual income from all sources of the company shall be made by the Special Commissioners in accordance with the respective interests of the members"
What then were the respective interests of the members in the actual income of the Company? The Commissioners apportioned to the...
To continue reading
Request your trial
-
Wigram Family Settled Estates, Ltd ((in Liquidation)) v Commissioners of Inland Revenue
...[1956] 3 All E.R. 118; 222 L.T. Jo. 80; (C.A.) [1957] 1 W.L.R. 233; 101 S.J. 128; [1957] 1 All E.R. 311; 223 L.T. Jo. 64; (H.L.) [1958] 1 W.L.R. 213; 102 S.J. 137; [1958] 1 All E.R. 338; 225 L.T. Jo. 1 Not included in the present print. * The whole of these amounts being apportioned under S......